In the red AJ Lucas eases debt pressure
AJ Lucas has rounded out a horror season for mining contractor
results with a record $126.9 million loss and revenue collapsing as
resource companies shunned doing business with the financially strained
group.
The Brisbane-based company said, however, that it had completed a recapitalisation, including raising $200.8m before and after balance date, to pay down borrowings and that it had extended the maturity on its loan from Kerogen, the Hong Kong-based private equity group that owns 49 per cent of the company.
Kerogen agreed on Friday to extend the maturity on its borrowings out to 2017, alleviating the strain on its balance sheet that showed current liabilities of $170m, more than double current assets of $81.5m.
Revenue fell 41.5 per cent, from $504.1m to $294.3m, which AJ Lucas attributed to "a reluctance to award work to the company while its balance sheet remained under strain".
AJ Lucas is the latest in a series of resource industry contractors, including Transfield and Boart Longyear, to be forced into heavy cost cuts, job losses and debt repayments because of heavy cuts to exploration and development budgets at Australian resource companies.
The $126m loss compares with a $110.2m loss in the year 2011-12.
Material, subcontractor, employee and plant costs were cut heavily and the engineering division, in which revenue fell 58 per cent, has been refocused on specialist contracting to energy and water businesses.
It picked up $100m of new work since changing direction, the company said.
The drilling division, in which revenue fell 13.9 per cent, is also focusing on profitable growth over revenue growth and was working with cost-conscious clients to improve productivity and lower costs.
Despite the fall in revenue, earnings before interest, tax, depreciation and amortization increased more than half to $23.5m, highlighting the company's success in reducing costs.
The loss before interest, tax, depreciation and amortisation was $19.3m, on top of which AJ Lucas piled impairment charges of $45.7m, $3m of restructuring and recapitalisation costs and provisions on legacy contracts of $13.1m. Interest increased by half to $39.4m.
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